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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11516
REMINGTON OIL AND GAS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2369148
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
8201 PRESTON ROAD, SUITE 600, DALLAS, TEXAS 75225-6211
(Address of principal executive offices)
(Zip code)
(214) 210-2650
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
There were 26,127,179 outstanding shares of Common Stock, $0.01 par value,
on August 1, 2002.
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REMINGTON OIL AND GAS CORPORATION
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 2
Condensed Consolidated Balance Sheets....................... 2
Condensed Consolidated Statements of Income................. 3
Condensed Consolidated Statements of Cash Flows............. 4
Notes to Condensed Consolidated Financial Statements........ 5
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations...................................
Item 3. Quantitative and Qualitative Disclosures about Market 10
Risk........................................................
PART II
OTHER INFORMATION
Item 1. Legal Proceedings........................................... 10
Item 2. Changes in Securities....................................... 10
Item 3. Defaults upon Senior Securities............................. 10
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 11
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED)
(IN THOUSANDS,
EXCEPT SHARE DATA)
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $ 14,504 $ 19,377
Accounts receivable.................................... 29,702 19,445
Prepaid expenses and other current assets.............. 2,520 1,487
--------- ---------
TOTAL CURRENT ASSETS...................................... 46,726 40,309
--------- ---------
PROPERTIES
Oil and natural gas properties (successful-efforts
method)............................................... 469,918 433,988
Other properties....................................... 3,129 3,023
Accumulated depreciation, depletion and amortization... (255,629) (237,661)
--------- ---------
TOTAL PROPERTIES.......................................... 217,418 199,350
--------- ---------
OTHER ASSETS.............................................. 953 773
--------- ---------
TOTAL ASSETS................................................ $ 265,097 $ 240,432
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities............... $ 40,597 $ 34,232
Short-term notes payable and current portion of other
long-term payables.................................... 3,083 3,253
--------- ---------
TOTAL CURRENT LIABILITIES................................. 43,680 37,485
--------- ---------
LONG-TERM LIABILITIES
Notes payable.......................................... 27,000 71,000
Other long-term payables............................... 2,482 3,758
Deferred income tax liability.......................... 5,168 2,851
--------- ---------
TOTAL LONG-TERM LIABILITIES............................... 34,650 77,609
--------- ---------
TOTAL LIABILITIES...................................... 78,330 115,094
--------- ---------
Commitments and contingencies (Note 5)
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 25,000,000 shares
authorized, no shares outstanding..................... -- --
Common stock, $.01 par value, 100,000,000 shares
authorized, 26,183,556 shares issued and 26,092,820
shares outstanding in 2002, 22,685,240 shares issued
and 22,650,881 outstanding in 2001.................... 262 227
Additional paid-in capital............................. 114,453 56,698
Restricted common stock................................ 5,468 8,055
Unearned compensation.................................. (3,887) (4,581)
Retained earnings...................................... 71,448 64,939
Treasury stock......................................... (977) --
--------- ---------
TOTAL STOCKHOLDERS' EQUITY................................ 186,767 125,338
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $ 265,097 $ 240,432
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
2
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------
2002 2001 2002 2001
--------- --------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
REVENUES
Oil sales............................................ $11,261 $ 7,619 $18,291 $15,633
Gas sales............................................ 15,973 25,776 28,207 56,984
Other income......................................... 4,294 786 4,337 1,552
------- ------- ------- -------
TOTAL REVENUES......................................... 31,528 34,181 50,835 74,169
------- ------- ------- -------
COSTS AND EXPENSES
Operating costs and expenses......................... 4,293 3,686 7,438 6,734
Exploration expenses................................. 4,958 2,755 8,622 4,171
Depreciation, depletion and amortization............. 10,250 9,459 19,818 18,249
General and administrative........................... 1,550 1,566 2,797 2,807
Stock based compensation............................. 395 389 853 2,914
Settlements.......................................... -- 13,524 -- 13,524
Interest and financing expense....................... 464 888 1,293 2,192
------- ------- ------- -------
TOTAL COSTS AND EXPENSES............................... 21,910 32,267 40,821 50,591
------- ------- ------- -------
INCOME BEFORE TAXES.................................... 9,618 1,914 10,014 23,578
------- ------- ------- -------
Income tax expense................................... 3,366 673 3,505 7,680
------- ------- ------- -------
NET INCOME............................................. $ 6,252 $ 1,241 $ 6,509 $15,898
======= ======= ======= =======
BASIC INCOME PER SHARE................................. $ 0.24 $ 0.06 $ 0.27 $ 0.73
======= ======= ======= =======
DILUTED INCOME PER SHARE............................... $ 0.22 $ 0.05 $ 0.25 $ 0.66
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC)............ 25,953 21,785 24,424 21,686
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED).......... 27,889 24,559 26,316 24,431
======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
3
REMINGTON OIL AND GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
-------------------
2002 2001
-------- --------
(UNAUDITED)
(IN THOUSANDS)
CASH FLOW PROVIDED BY OPERATIONS
NET INCOME................................................ $ 6,509 $ 15,898
Adjustments to reconcile net income
Depreciation, depletion and amortization............... 19,818 18,249
Deferred income taxes.................................. 3,505 7,075
Amortization of deferred charges....................... 94 85
Deferred net profits expense........................... -- 1,270
Dry hole and impairment costs.......................... 8,278 1,884
Cash paid for dismantlement costs...................... (42) --
Stock based compensation............................... 853 2,914
(Gain) on sale of properties........................... (4,087) --
Changes in working capital
(Increase) decrease in accounts receivable............. (10,274) 2,063
(Increase) decrease in prepaid expenses and other
current assets........................................ (1,314) 522
Increase (decrease) in accounts payable and accrued
liabilities........................................... 6,320 (3,235)
Decrease in restricted cash............................ -- 10,792
-------- --------
NET CASH FLOW PROVIDED BY OPERATIONS...................... 29,660 57,517
-------- --------
CASH FROM INVESTING ACTIVITIES
Payments for capital expenditures...................... (49,704) (57,299)
Proceeds from property sales........................... 7,669 --
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES................... (42,035) (57,299)
-------- --------
CASH FROM FINANCING ACTIVITIES
Proceeds from note payable............................. 6,600 5,000
Loan origination costs for line of credit.............. -- (307)
Payments on notes payable and other long-term
payables.............................................. (52,046) (10,115)
Common stock issued.................................... 53,925 1,367
Treasury stock acquired................................ (977) --
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES....... 7,502 (4,055)
-------- --------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS................. (4,873) (3,837)
Cash and cash equivalents at beginning of period.......... 19,377 18,131
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 14,504 $ 14,294
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
4
REMINGTON OIL AND GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Remington Oil and Gas Corporation is an independent oil and gas exploration
and production company incorporated in Delaware. Our oil and gas properties are
located in the shallow water offshore Gulf of Mexico and the onshore Gulf Coast.
We prepared these financial statements according to the instructions for
Form 10-Q. Therefore, the financial statements do not include all disclosures
required by generally accepted accounting principles. However, we have recorded
all transactions and adjustments necessary to fairly present the financial
statements included in this Form 10-Q. The adjustments made are normal and
recurring. The following notes describe only the material changes in accounting
policies, account details or financial statement notes during the first six
months of 2002. Therefore, please read these financial statements and notes to
the financial statements together with the audited financial statements and
notes to financial statements in our 2001 Form 10-K. The income statements for
the three and six months ended June 30, 2002, cannot necessarily be used to
project results for the full year. We have made certain reclassifications to
prior year financial statements in order to conform to current year
presentations.
NOTE 2. NEW ACCOUNTING POLICIES
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 144
During the first quarter of 2002, we adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which supercedes Statement of Financial Accounting Standards
No. 121, "Accounting for Impairment of Long-Lived Assets." The Statement
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. Adoption of this Statement did not have a material effect on
our balance sheet or income statement.
UNPROVED PROPERTIES
Through December 31, 2001, we assessed the capitalized costs of unproved
properties periodically to determine whether their value has been impaired below
the capitalized costs, recognizing a loss to the extent such impairment was
indicated. In making these assessments, we considered factors such as
exploratory drilling results, future drilling plans and lease expiration terms.
Effective January 1, 2002, we implemented a policy whereby we amortize the
balance of our individually immaterial unproved property costs (adjusted by an
anticipated rate of future successful development) over an average lease term.
Individually significant properties (those with a net cost of $500,000 or more)
will continue to be evaluated periodically on a separate basis for impairment.
We will transfer the original cost of an unproved property to proved properties
when we find commercial oil and gas reserves sufficient to justify development
of the property. The effect of this change was not material to our results of
operations.
NOTE 3. COMMON STOCK AND NOTES PAYABLE
In March 2002, we issued 3.0 million shares of common stock at $18.50 per
share. Net proceeds from the offering totaled approximately $52.8 million. We
used $44.0 million of the net proceeds to reduce outstanding bank debt from
$71.0 million to $27.0 million. We used the remainder of the net proceeds for
working capital.
As of June 30, 2002, our amended credit facility of $150.0 million has a
borrowing base of $75.0 million. Interest only is payable quarterly through May
3, 2004, at which time the line expires and all principal becomes due, unless
the line is extended or renegotiated.
5
REMINGTON OIL AND GAS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4. NET INCOME PER SHARE
The following table presents our calculation of basic and diluted income
per share.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
2002 2001 2002 2001
-------- -------- ------- -------
Net income available for basic income per
share........................................ $ 6,252 $ 1,241 $ 6,509 $15,898
Interest expense on Convertible Notes (net of
tax)...................................... -- 66 -- 143
------- ------- ------- -------
Net income available for diluted income per
share........................................ $ 6,252 $ 1,307 $ 6,509 $16,041
======= ======= ======= =======
Basic income per share......................... $ 0.24 $ 0.06 $ 0.27 $ 0.73
======= ======= ======= =======
Diluted income per share....................... $ 0.22 $ 0.05 $ 0.25 $ 0.66
======= ======= ======= =======
Weighted average common stock
Total common shares for basic income per
share..................................... 25,953 21,785 24,424 21,686
Dilutive stock options outstanding (treasury
stock method)............................. 1,486 1,586 1,442 1,524
Restricted common stock grant................ 450 663 450 663
Warrants..................................... -- 76 -- 66
Shares assumed issued upon conversion of
Notes..................................... -- 449 -- 492
------- ------- ------- -------
Total common shares for diluted income per
share........................................ 27,889 24,559 26,316 24,431
======= ======= ======= =======
NOTE 5. CONTINGENCIES
We have no material pending legal proceedings.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion will assist in the understanding our financial
position and results of operations. The information below should be read in
conjunction with the financial statements, the related notes to financial
statements, and our Form 10-K for the year ended December 31, 2001.
Our discussion contains both historical and forward-looking information. We
assess the risks and uncertainties about our business, long-term strategy, and
financial condition before we make any forward-looking statements, but we cannot
guarantee that our assessment is accurate or that our goals and projections can
or will be met. Statements concerning results of future exploration,
exploitation, development, and acquisition expenditures as well as revenue,
expense, and reserve levels are forward-looking statements. We make assumptions
about commodity prices, drilling results, production costs, administrative
expenses, and interest costs that we believe are reasonable based on currently
available information.
This discussion is primarily an update to the Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the 2001
Form 10-K. We recommend that you read this discussion in conjunction with the
Form 10-K.
Our long-term strategy is to increase our oil and gas production and
reserves while keeping our operating costs and our finding and development costs
competitive with our industry peers.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes certain contractual obligations and
commercial commitments as of June 30, 2002.
PAYMENTS DUE BY PERIOD
-----------------------------------------------------------
LESS THAN
TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS AFTER 5 YEARS
------- --------- --------- --------- -------------
(IN THOUSANDS)
Contractual obligations
Bank debt........................ $27,000 $ -- $27,000 $ -- $ --
Other payables................... 5,565 3,083 2,482 -- --
Office lease..................... 2,689 441 895 984 369
------- ------ ------- ---- ----
Total......................... $35,254 $3,524 $30,377 $984 $369
======= ====== ======= ==== ====
On June 30, 2002, our current assets exceeded our current liabilities by
$3.0 million. Our current ratio was 1.07 to 1.
Net cash flow from operations before changes in working capital decreased
by $12.4 million, or 26%, primarily because of lower gas revenues during the
first half of 2002 compared to the first half of 2001, partially offset by
higher oil revenues. Gas sales decreased by $28.8 million, or 51%, because
average prices decreased by 45% and production decreased by 10%. However, oil
sales increased by $2.7 million, or 17%, because oil production increased by
35%, partially offset by lower oil prices.
During the six months of 2002, our capital expenditures totaled $49.7
million of which $47.7 million, or 96%, was spent in the Gulf of Mexico where we
incurred costs to drill and complete wells and upgrade and complete platforms
and facilities. We have increased our 2002 capital and exploration budget from
$75.0 million to $93.0 million. This updated capital and exploration budget
includes $46.0 million for exploratory wells, $43.0 million for offshore
platforms and development drilling, and $4.0 million for leasing and seismic and
property acquisitions. If our exploratory wells are successful, we may incur
additional development costs for well completions, platforms and facilities. We
expect that our cash, estimated future cash flow from operations, and available
bank line of credit will be adequate to fund these expenditures for the
remainder of 2002.
In March 2002 we issued 3.0 million shares of common stock at $18.50 per
share. Net proceeds from the offering totaled approximately $52.8 million. We
used $44.0 million of the net proceeds to reduce outstanding bank debt from
$71.0 million to $27.0 million, and we used the remainder for working capital.
7
As of June 30, 2002, our credit facility of $150.0 million had a borrowing
base of $75.0 million. Interest only is payable quarterly through May 3, 2004,
at which time the line expires and all principal becomes due, unless the line is
extended or renegotiated. As of June 30, 2002, we had $27.0 million borrowed
under the facility. The banks review the borrowing base semi-annually and may
increase or decrease the borrowing base relative to a redetermined estimate of
proved oil and gas reserves. Our oil and gas properties are pledged as
collateral for the line of credit. Additionally, we have agreed not to pay
dividends.
RESULTS OF OPERATIONS
We recorded net income for the three months ended June 30, 2002, of $6.3
million or $0.24 basic income per share and $0.22 diluted income per share
compared to three months ended June 30, 2001, of $1.2 million or $0.06 basic
income per share and $0.05 diluted income per share. For the first six months of
2002, we recorded net income of $6.5 million or $0.27 basic income per share and
$0.25 diluted income per share compared to $15.9 million or $0.73 basic income
per share and $0.66 diluted income per share for the first six months of 2001.
Net income for the three months ended June 30, 2002, was higher than in the
prior year primarily because of a one-time pre-tax charge of $13.5 million
recorded in 2001 in connection with the settlement of the Phillips litigation,
and a $4.1 million gain from the sale of certain South Texas properties in 2002,
partially offset by lower gas revenues and higher operating expenses in 2002.
Net income for the first six months of 2002 compared to 2001 decreased primarily
because of lower gas revenue partially offset by the charge recorded in 2001 for
the settlement of the Phillips litigation. The following table reflects the
increase or decrease in oil and gas sales revenue due to the changes in prices
and volumes.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
2002 2001 2002 2001
-------- -------- -------- -------
(IN THOUSANDS, EXCEPT PRICES)
Oil production volume (Bbls).................. 457 307 825 612
Oil sales revenue............................. $11,261 $ 7,619 $ 18,291 $15,633
Price per barrel.............................. $ 24.64 $ 24.82 $ 22.17 $ 25.54
Increase (decrease) in oil sales revenue due
to:
Change in prices............................ $ (55) $ (2,062)
Change in production volume................. 3,697 4,720
------- --------
Total increase (decrease) in oil sales
revenue..................................... $ 3,642 $ 2,658
======= ========
Gas production volume (Mcf)................... 4,832 5,496 9,587 10,698
Gas sales revenue............................. $15,973 $25,776 $ 28,207 $56,984
Price per Mcf................................. $ 3.31 $ 4.69 $ 2.94 $ 5.33
Decrease in gas sales revenue due to:
Change in prices............................ $(7,584) $(25,568)
Change in production volume................. (2,219) (3,209)
------- --------
Total decrease in gas sales revenue........... $(9,803) $(28,777)
======= ========
Oil sales revenue for the second quarter of 2002 compared to the same
period in 2001 increased by $3.6 million, or 48%, because oil production
increased by 150,000 barrels, or 49%, partially offset by lower average oil
prices. Oil production from offshore Gulf of Mexico increased by 177,000
barrels, or 91%, because of production from new properties. Oil production from
onshore gulf coast properties decreased by 27,000 barrels, or 24%, because of
natural depletion of the existing producing properties and the sale of certain
properties in South Texas in April 2002. Average prices decreased from $24.82
during the second quarter of 2001 to $24.64 during the second quarter of 2002.
Oil sales revenue for the first half of 2002 compared to the first half of 2001
increased by $2.7 million, or 17%, because oil production increased by 213,000
barrels, or 35%, partially offset by lower average oil prices. Oil production
from offshore Gulf of Mexico increased by 245,000 barrels, or 63%, because of
production from new properties. Oil production from onshore gulf coast
8
properties decreased by 32,000 barrels, or 15%, because of natural depletion of
the existing producing properties and the sale of certain properties in South
Texas in April 2002. Average prices decreased from $25.54 during the first six
months of 2001 to $22.17 during the first six months of 2002, which decreased
oil revenues by $2.0 million.
Gas sales revenue for the three months ended June 30, 2002, compared to the
same period in 2001 decreased by $9.8 million, or 38%, because of lower average
gas prices and lower production. Average gas prices decreased from $4.69 per Mcf
in 2001 to $3.31 per Mcf, or 30%, in 2002, causing gas sales revenues to
decrease by $7.6 million. Production decreased by 664,000 Mcf, or 12%, primarily
because of lower gas production from the offshore Gulf of Mexico and the sale of
certain properties. Gas sales revenue for the first half of 2002 compared to the
first half of 2001 decreased by $28.8 million, or 51%, because of lower average
gas prices and lower production. Average gas prices decreased from $5.33 per Mcf
in 2001 to $2.94 per Mcf, or 45%, in 2002, causing gas sales revenues to
decrease by $25.6 million. Production decreased by 1.1 Bcf, or 10%, primarily
because of lower gas production from the offshore Gulf of Mexico due to natural
declines and the sale of certain properties.
Other income increased primarily because of a $4.1 million gain from the
sale of properties in South Texas in April 2002.
The following table presents certain expense items per Mcf equivalent
(Mcfe) of production. (Barrels of oil are converted to Mcfe at a ratio of one
barrel equals six Mcf.)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------- -------------
2002 2001 2002 2001
----- ----- ----- -----
Operating costs and expenses........................... $0.57 $0.50 $0.51 $0.47
Depreciation, depletion and amortization............... $1.35 $1.29 $1.36 $1.27
General and administrative (excluding stock-based
compensation)........................................ $0.20 $0.21 $0.19 $0.20
Interest and financing expense......................... $0.06 $0.12 $0.09 $0.15
Operating costs and expenses for the second quarter of 2002 compared to the
second quarter of 2001 increased by $607,000, or 16%, and for the first six
months of 2002 compared to 2001 increased by $704,000, or 10%, because of
additional operated properties in the Gulf of Mexico.
Exploration expense increased by $2.2 million during the second quarter of
2002 and by $4.5 million during the first six months of 2002 primarily because
of increased dry hole expense. Dry hole expense for 2002 includes two wells in
the Gulf of Mexico and two wells in South Texas totaling $8.3 million compared
to $1.9 million dry hole expense in 2001. Depreciation, depletion, and
amortization expense increased by $791,000 during the second quarter of 2002 and
by $1.6 million during the first six months of 2002 compared to the same period
in the prior year because of increased oil production and an increase in the
number of producing properties.
Excluding the $2.1 million effect of the triggering of the contingent stock
grant in January of 2001, general and administrative expenses have been
virtually flat between the respective three and six month periods. Stock based
compensation expense includes the amortized compensation cost related to the
contingent stock grant and the directors fees paid in common stock. During the
first quarter of 2001 we recorded a "catch up" amortization of approximately
$2.1 million from the date of the grant in June 1999 to the measurement date in
January 2001.
During the second quarter of 2001 we settled litigation with Phillips
Petroleum concerning a net profits interest on one of our Gulf of Mexico blocks.
In connection with the settlement we charged $13.5 million to expense during the
second quarter of 2001.
9
Interest and financing expenses decreased by 47% during the second quarter
of 2002 and by 41% during the six months ended June 30, 2002, compared to the
same periods in the prior year because of lower interest rates and lower average
debt balances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
Our market risk sensitive instrument at June 30, 2002, is a revolving bank
line of credit. At June 30, 2002, the unpaid principal balance under the line
was $27.0 million which approximates its fair value. The interest rate on this
debt is based on a premium of 150 to 225 basis points over the London Interbank
Offered Rate ("Libor"). The rate is reset periodically, usually every three
months. If on June 30, 2002, Libor changed by one full percentage point (100
basis points) the fair value of our revolving debt would change by approximately
$67,500. We have not entered into any interest rate hedging contracts.
COMMODITY PRICE RISK
Occasionally we sell forward portions of our production under physical
delivery contracts that by their terms cannot be settled in cash or other
financial instruments. Such contracts are not subject to the provisions of
Statement of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities." Accordingly we do not provide sensitivity
analysis for such contracts. During the period January 1, 2002, through June 30,
2002, we had physical delivery contracts in place to sell 20,000 MMBtu of gas
per day (approximately 1/3 of our gas production for that 6-month period) at a
price of approximately $2.77 per MMBtu. Currently we are selling all of our
production at market prices. A vast majority of our production is sold on the
spot markets. Accordingly, we are at risk for the volatility in commodity prices
inherent in the oil and gas industry.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We have no material pending legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 2002, we held our annual stockholders' meeting to elect members
to the company's board of directors. The stockholders voted as follows:
ELECTION OF DIRECTORS FOR WITHHELD
- --------------------- ---------- ---------
Don D. Box.................................................. 17,737,340 3,112,407
John E. Goble, Jr. ......................................... 20,684,845 164,902
William E. Greenwood........................................ 20,684,595 165,152
David H. Hawk............................................... 20,684,845 164,902
James Arthur Lyle........................................... 20,684,245 165,502
David E. Preng.............................................. 20,684,245 165,502
Thomas W. Rollins........................................... 20,684,845 164,902
Alan C. Shapiro............................................. 20,683,745 166,002
James A. Watt............................................... 17,746,585 3,103,162
The members of the board of directors do not serve staggered terms of
office. All directors elected at the meeting were already members of the board
at the time of election. No director serving at the time of the election failed
to retain his seat on the board.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.2.1*** Certificate of Amendment of Certificate of Incorporation of
Remington Oil and Gas Corporation.
3.3+ By-Laws as amended.
4.1* Form of Indenture, Box Energy Corporation to United States
Trust Company of New York, Trustee, dated December 1, 1992,
8 1/4% Convertible Subordinated Notes due December 1, 2002.
10.1## Pension Plan of Remington Oil and Gas Corporation, as
Amended and Restated, effective January 1, 2000.
10.2## Amendment Number One to the Pension Plan of Remington Oil
and Gas Corporation.
10.3** Box Energy Corporation Severance Plan.
10.4# Box Energy Corporation 1997 Stock Option Plan (as amended
June 17, 1999, and May 23, 2001).
10.5** Box Energy Corporation Non-Employee Director Stock Purchase
Plan.
10.6++ Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and two
executive officers.
10.7++ Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and an
executive officer.
10.8+++ Employment Agreement effective January 31, 2000, by and
between Remington Oil and Gas Corporation and James A. Watt.
10.9+++ Form of Contingent Stock Grant Agreement -- Directors.
10.10+++ Form of Contingent Stock Grant Agreement -- Employees.
10.11+++ Form of Amendment to Contingent Stock Grant
Agreement -- Directors.
10.12+++ Form of Amendment to Contingent Stock Grant
Agreement -- Employees.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
11
99.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-2 (file number 33-52156) filed with the Commission and effective on
December 1, 1992.
** Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1997, filed with the Commission and
effective on or about March 30, 1998.
*** Incorporated by reference to the Company's Registration Statement on Form
S-4 (file number 333-61513) filed with the Commission and effective on
November 27, 1998.
+ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1998, filed with the Commission and
effective on or about March 30, 1999.
++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 1999, filed with the Commission
and effective on or about November 12, 1999.
+++ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2000, filed with the Commission and
effective on or about March 16, 2001.
# Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 2001, filed with the Commission
and effective on or about November 9, 2001.
## Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2001, filed with the Commission and
effective on or about March 21, 2002.
(b) On April 24, 2002, we filed a Form 8-K reporting in Item 4 therein that
on April 17, 2002, we changed our certifying accountant from Arthur Andersen LLP
to Ernst & Young LLP.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REMINGTON OIL AND GAS CORPORATION
By: /s/ JAMES A. WATT
------------------------------------
James A. Watt
President and Chief Executive Officer
Date: August 2, 2002
By: /s/ J. BURKE ASHER
------------------------------------
J. Burke Asher
Vice President/Finance
Date: August 2, 2002
13
INDEX TO EXHIBITS
3.2.1*** Certificate of Amendment of Certificate of Incorporation of
Remington Oil and Gas Corporation.
3.3+ By-Laws as amended.
4.1* Form of Indenture, Box Energy Corporation to United States
Trust Company of New York, Trustee, dated December 1, 1992,
8 1/4% Convertible Subordinated Notes due December 1, 2002.
10.1## Pension Plan of Remington Oil and Gas Corporation, as
Amended and Restated, effective January 1, 2000.
10.2## Amendment Number One to the Pension Plan of Remington Oil
and Gas Corporation.
10.3** Box Energy Corporation Severance Plan.
10.4# Box Energy Corporation 1997 Stock Option Plan (as amended
June 17, 1999, and May 23, 2001).
10.5** Box Energy Corporation Non-Employee Director Stock Purchase
Plan.
10.6++ Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and two
executive officers.
10.7++ Form of Employment Agreement effective September 30, 1999,
by and between Remington Oil and Gas Corporation and an
executive officer.
10.8+++ Employment Agreement effective January 31, 2000, by and
between Remington Oil and Gas Corporation and James A. Watt.
10.9+++ Form of Contingent Stock Grant Agreement -- Directors.
10.10+++ Form of Contingent Stock Grant Agreement -- Employees.
10.11+++ Form of Amendment to Contingent Stock Grant
Agreement -- Directors.
10.12+++ Form of Amendment to Contingent Stock Grant
Agreement -- Employees.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-2 (file number 33-52156) filed with the Commission and effective on
December 1, 1992.
** Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1997, filed with the Commission and
effective on or about March 30, 1998.
*** Incorporated by reference to the Company's Registration Statement on Form
S-4 (file number 333-61513) filed with the Commission and effective on
November 27, 1998.
+ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 1998, filed with the Commission and
effective on or about March 30, 1999.
++ Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 1999, filed with the Commission
and effective on or about November 12, 1999.
+++ Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2000, filed with the Commission and
effective on or about March 16, 2001.
# Incorporated by reference to the Company's Form 10-Q (file number 1-11516)
for the fiscal quarter ended September 30, 2001, filed with the Commission
and effective on or about November 9, 2001.
## Incorporated by reference to the Company's Form 10-K (file number 1-11516)
for the fiscal year ended December 31, 2001, filed with the Commission and
effective on or about March 21, 2002.